OREANDA-NEWS. Fitch Ratings has taken the following rating actions on KeyCorp Student Loan Trust 2004-A (Group I):

--Class A-2 'AAAsf'; Rating Watch Negative maintained;
--Class B affirmed at 'Asf'; Outlook Stable.

KEY RATING DRIVERS
Maturity Risk: The Rating Watch Negative action is based on the heightened risk of the class A-2 notes missing its legal final maturity dates of Oct. 27, 2042, which would result in an event of default. In an event of such technical default, Fitch would expect ultimate repayment of full principal and interest after the legal final. The magnitude of the rating action could vary depending on remaining time to maturity, recent payment trends, issuer actions such as loan purchases, or other external factors. Absent any issuer actions, structural or other mitigants, it is possible that 'AAA' ratings could be downgraded one to two rating categories.

High Collateral Quality: The trust collateral for the group 1 notes is comprised of 100% of Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and at least 97% reinsurance of principal and accrued interest provided by the U.S. Department of Education.

Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance), excess spread, and for the class A notes, subordination provided by the class B notes. As of December 2015, total and senior parity (excluding the reserve account) is 100.00% (the release level) and 105.42% respectively. Including the reserve, total parity is 100.47%. The parity ratios are expected to stay at the release level as the step-down date has passed, and cash release is expected to continue.

Adequate Liquidity Support: Liquidity support is provided by a Debt Service Reserve Fund currently sized at $549,105.

Acceptable Servicing Capabilities: KeyBank National Association is the Master Servicer for the transaction, with Pennsylvania Higher Education Assistance Agency and Great Lakes Educational Loan Services, Inc. acting as subservicers. Fitch believes all services are acceptable servicers of FFELP student loans.

On Nov. 18, 2015, Fitch released its exposure draft which delineates revisions it plans to make to the 'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria', dated June 23, 2014. Fitch has reviewed this transaction under both the existing and proposed criteria.

RATING SENSITIVITIES
Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAAsf' FFELP ABS ratings will likely move in tandem with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch's published stresses could result in future downgrades. Likewise, a buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.